The Rent or Buy Calculator
allows you to estimate the costs of owning a home vs. the costs of
renting.

Enter ballpark values by dragging the sliders left or right. Enter exact numbers by clicking in the box and type your number (no commas).

The results of your calculations show in the box near the bottom of the calculator.

Buy Information

Home price

Enter the price of the home you
wish to buy.

Down Payment

Enter the percentage of the home
price you wish to pay as a down payment. The down payment, along with
the price of the home will be used to figure out how much loan you
will carry.

Deductible Loan Costs

A portion of the loan costs, such
as points is deductible. Some lenders call this loan
origination fees. Enter how many points you plan to pay for the loan.
The points paid will increase the cost of owning. However, since it
is deductible expense, your cost of ownership will be slightly
lowered by your tax deduction.

Loan Costs

The nondeductible loan costs add
to the cost of ownership.

Loan Rate

Enter the interest rate the lender
will charge for the loan. The monthly payment, which can be
determined from the interest rate and the loan amount, is a big part
of the ownership cost of a home.

Loan Term

Enter the length of the loan you
will get to buy your home.. This information will be used to
determine the monthly payment, the tax deduction on the interest paid
etc.

Property Taxes

Homeowners pay property taxes
every year. The taxes will increase ownership costs, although, the
deductibility of the taxes will reduce their overall cost slightly.

Other Expenses

Enter any annual nondeductible
homeowner expenses you expect. These expenses will add to the home
ownership costs.

Years to Sell

Enter the number of years you will
keep the home before selling it. It will also be used as the base
time period for renting vs. buying comparison costs.

Annual Appreciation

Enter the rate at which you
anticipate the value of your home is going to grow. You may not enter
a negative number. High appreciation will shrink the cost of owning a
home.

Selling Cost

Enter the percentage of the
selling price you will incur as costs. This will include the
commission you may pay your realtor, any closing costs you pay
towards the sale and any renovations you make to your house to help
sell it. Minimizing these costs will reduce your ownership costs.

Rent
Information

Monthly Rent

Enter the monthly amount you will
have to pay for the home you want to rent.

Rent Increases

Enter the average percentage you
anticipate your rent will increase every year.

Financial
Assumptions

Tax Rate

Enter your federal and state
income tax rate. This figure will be used to compute the tax break
you will receive for the interest you pay on your home loan. The tax
break will reduce the ownership costs. In addition, the tax rate will
also be used to reduce the savings you would accrue were you to
invest the money used for a down payment were you to not buy a
home.

Savings Rate

Enter the average yield on
investments you make. Calculations assume that if you don't buy a
house, you would invest the money you would have used for a down
payment, thus reducing the cost of renting.

Results

The results box compares the cost
of renting to the cost of owning a home and shows which option saves
you money.